(Bloomberg) – Reducing interest rates is causing pain for Bank of America Corp..
The company's shares fell after reporting that net consumer income reached 9.7%, injured by falling interest income. The retail unit of the Bank of America had boosted the company in recent months, driven by loan growth and deposit. The first fall in earnings in the division was in more than three years.
“There was a negative operational leverage year on year as American Bank had to take the rate cuts, Brian Kleinhanzl said,“ KBW ”in a note to clients.
The trading income climbed 13%, estimates of analysts beating, but the smallest increase was still at Bank of America on Wall Street, with JPMorgan Chase & Co.. taking fourth quarter performance in bond trading and Citigroup Inc.. more than twice the predictions of analysts.
American Bank shares fell 2.2% to $ 34.53 at 9:42 a.m. in New York. They increased by 43% last year, compared to a 32% increase for the KBW Bank index of 24 companies.
While the largest SF lenders completed the year largely on a large note, affected by the strong economy of the University, they also deal with challenges including reductions in the Federal Reserve interest rate, expectations. to slow growth, geopolitical tensions and global trade disputes.
“Our results continue to reflect the strength of the consumer in the world's largest economy,” said CEO Brian Moynihan on a conference call with analysts on Wednesday. “A quarter as well as transfer,” with the bank feeling the impact of interest rates is falling in the second half of 2019.
Net net income, net income – income from customer loan payments less the amount paid by the depositor company – it fell 2.9% to $ 12.1 billion in the fourth quarter. On a fully equivalent basis, the figure was $ 12.3 billion, exceeding the average estimate in the Bloomberg survey. NII is likely to be “down to moderate” this year, Chief Financial Officer Paul Donofrio said on the call.
The Charlotte, a North Carolina based investment banking department, continued its turnaround under Matthew Koder. Investment banking charges rose by 9.3% from a previous year after a subversive third quarter.
Also in the fourth quarter results:
The bank's efficiency ratio, a measure of profitability, improved to 59% from 66% in the third quarter. Net income fell by 3.9% to $ 6.99 billion as the firm generated 11% return on equity. The earnings per share were 74 cents, and the average estimate was 69 per cent of 13 analysts in Bloomberg's survey.
To contact the reporter on this story: Lananh Nguyen in New York at [email protected]
Please contact the editors responsible for this story: Michael J. Moore at [email protected], Daniel Taub, Steve Dickson
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